The collapse of a monopoly

As I previously mentioned, I got an iPhone for christmas.  In the UK, like the USA, Apple arranged an exclusive deal with one mobile provider, in this case O2.  The cheapest plan that O2 offered was for £35/month, which included the remarkably low 200 minutes and 200 texts per month, but did also allow for unlimited internet usage when using the O2 network rather than a local 802.11 network.

Perhaps because of the increasing availability of iPhone substitutes, perhaps because of the increasing numbers of jail-broken iPhones that can be used on other networks or perhaps because they know that the new v1.1.3. of the iPhone firmware has already been jailbroken and that when combined with the upcoming release of the iPhone SDK, it’ll stay jailbroken, O2 has recently realised that their time of being a true monopolist has ended.   How do I know this?  Because this week I received the following text message from O2:

We’re really pleased to tell you that we are upgrading your £35 iPhone tariff in Feb so you will benefit by mid March at the latest.

The new tariff will take your minutes from 200 to 600 and your texts from 200 to 500.  Plus you’ll continue to receive the same unlimited UK data allowing you to surf the internet on your iPhone.

Better still, you don’t have to do a thing to get them.  We’ll text you to let you know when your new tariff is live.

Simply tap the link to find out more, including details on all our new iPhone tariffs and to see the new tariff terms & conditions.

Which, as a tariff, is much closer to their competitors without the iPhone.  For example, Vodafone’s £35/month plan charges £1 for the first 15MB of internet each day and £2 for each additional MB and includes your choice of:

  • 500 minutes of talk and unlimited texts
  • 750 minutes of talk and 100 texts, or
  • 500 minutes of talk and 500 texts with £52.50 knocked off the 18-month bill.

They’ve only dropped down to the usual category of monopolistic competition (they still have pricing power, which they use to implement second-degree price discrimination), but O2’s time of being a complete monopolist has come to an end.

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